Does this house really believe it should be included in the FIRE net worth?

I had some fun this week teaming up with Mr YFG to debate whether your primary home is one of your FIRE assets or not.

The great housing FIRE debate

Or did I? The mighty Monevator was kind enough to host the post and the comments following the post are excellent, and flesh out the debate brilliantly. And as they highlight, everybody’s milage will vary. In particular, one needs to be careful to define whether the net worth calculation is the FIRE net worth calculation.

One of the things I enjoyed about writing that post was having to argue the opposite case from what I normally would say. Hats off F Scott Fitzgerald and Charlie Munger.

To set the record straight, my actual approach is to exclude the value of my residence (the Dream Home) from my FIRE calculations. What I try to explore in my blog, is the challenge of FIRE (Financial Independence, roughly) without needing to change my lifestyle. For me, London epitomises this challenge – it has an excellent lifestyle, but it is expensive. So the FIRE dynamics are particularly challenging here, at least compared to the ‘frugal’ approaches followed by some in the FIRE community.

Clearly, if one is prepared to sell up and reorganise one’s housing arrangements, in Cyprus if need be, then one’s house is just one asset among many. But if, like me, you are happy where you are, and want to know when working becomes optional without having to move neighbourhoods / sell assets / disrupt the pets, then it is easier to focus on your investment income (and decumulation potential) and your spending (and potential spending).

So, my own calculations about investment income and spending assume I need to continue to fund the (considerable) expenses of living in the Dream Home, and that I need to do so from other assets. No Rent-a-Room for me.



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